The
Fiscal Year (FY) 2002 consolidated financial statements for the Department of
Justice (DOJ) mark the second year that DOJ has earned an unqualified audit opinion
on all its statements. I want to extend my appreciation to the individuals and
organizations whose dedication made the FY 2002 unqualified opinion possible.

This
year, in pursuit of the Attorney Generalís Strategic Goal 8.2, Improve Financial
Management, our components worked to correct the internal control weaknesses in
their accounting practices and financial systems. I am pleased to report that
the numbers of component-level material weaknesses were reduced again this year.
While we still have major improvements ahead of us, the commitment of our financial
management and program staff was visible throughout the year. I would like to
particularly note the accomplishments of the Drug Enforcement Administration (DEA).
DEAís year-long commitment to its audit corrective action plan enabled DEA to
improve from four material weaknesses in FY 2001 to no material weaknesses this
year.

At the Department level, the independent auditors reported two material
weaknesses and related noncompliances: first, components did not always adhere
to proper federal accounting practices, which also impedes their financial statement
preparation and reporting abilities, and second, our financial systems did not
meet federal standards. Two fundamental impediments impact DOJís ability to correct
these weaknesses. First, many offices are not managing their obligations, accruing
their costs, or billing for reimbursable revenue monthly. Instead, these activities
are substantially performed at year-end under short deadlines, with resulting
inaccuracies. Second, many DOJ financial systems are outdated or do not fully
comply with federal accounting or systems standards; in fact, three of the nine
component-level material weaknesses reported by the independent auditors are related
to financial systems. Because the ability to improve our financial management
performance and eliminate control weaknesses is significantly dependent on our
systems, it is critical that DOJ improve its financial system status.

We
are in the second year of a major initiative to radically change our business
practices and modernize our financial management systems through the Attorney
Generalís Unified Financial Management System Project. In May of 2003 we are scheduled
to announce the acquisition of a commercial off-the-shelf core financial system
package that is certified as federally compliant by the Joint Financial Management
Improvement Program (JFMIP). Implementation of the new system will occur between
FY 2004 and FY 2007. Critical to this initiative is the idea that DOJís fundamental
business practices will be re-engineered and standardized concurrent with the
implementation of the unified financial system.

FY 2003 will be a year
of tremendous challenge and opportunity for us, We will work aggressively this
year to eliminate the material weaknesses in our accounting practices, and implement
interim corrective procedures to address the most critical weaknesses in our current
systems. And, we will remain committed to focusing our efforts on the deployment
of our new unified financial system.